20VC: Kalshi's $1BN Raise, the Polymarket Feud, and the Battle to Replace Traditional Media

22:37The standards guy, girl betting on an NHL game on Sunday, I think you said, doesn't have that. Is it not just like increasing access to a different field where there are different pros? I think that's part of it. I mean, like, I don't think that Citadel and Wall Street has asymmetric information on, for example, our political process. And you saw with the election, like the best traders in politics, what bills is going to pass, who's going to win an election. They're people that love politics. They're not Wall Street. Wall Street is good and they can get smarter over time. But where Wall Street is really good is seeing kind of like what hedge fund and mutual fund and whatever is buying which stock and they can know where a stock is going to go better than the average person.

23:15But a lot of people have a lot of insight about politics. Why? Because they've been following politics for a decade or two. And you see it in the numbers. These are some of the more successful traders on Calci. But there's another kind of facet to this, which is very important, is that the prediction market user is not just a trader. Actually, out of every 100 prediction market users, maybe there's like one or two traders that are actually trading on the market. But the rest of the users are getting informed about the world. It's really a form of news. It's a form of media. It's a way to basically come and get truth about what's going to happen next.

23:46In a world where actually it's been really hard to figure out what's happening. And you see this at every election, big election, people flock to Calci because you go on the traditional news networks and you don't know who won until five, six, seven hours after Calci, right? And that's extremely valuable. If you can see and get a little bit smarter about the future, we can make better decisions over time, allocate resources better and manage risks better. It's really interesting insight that one out of every 100 is, say, a trader, or one or two is a trader, and the rest are what I call in social lurkers.

24:17You know, people sit and watch on the sidelines. The question then becomes, and a lot of your investors ask this, why partner with a legacy media brand like CNN or CNBC when you could actually own the vertical? You have the money, dude. You could build the media brand and the media platform and own the entire stack. Why partner with legacy? and how long before that legacy partnership becomes cannibalism? I think they're not mutually exclusive. You know, that's a fair question. I just think that like right now we're so early that it's hard to think about cannibalism or think about any of this as a zero-sum question, right?

24:53We're just so early. The percentage of people that understand, deeply understand prediction markets is still so small. There's so much education to do. And I think the news and partners like CNN and CNBC are really an incredible way to get people to understand what these markets are about. And at the end of the mission of the company is like, we want to bring more truth to a lot of these processes, whether it's the election process. Right now we're using polls and pundits and people say whatever they want or weather or climate or the economy and how we make decisions about the economy. And the best way to do that is like put it in the places where people go and take that information, get their information about that.

25:26So imagine where election night coverage is informed by prediction markets, which actually work better than what we're doing today. That is actually net positive and the best way to do that is, well, let's go to the place where people are going to get their information about the election. And I think that news networks are an amazing way to do that. Do you not think you can create the next news network? I think we can. They're not mutually exclusive. I think we can do both. And I mean, even today, right, there's not a single news network that owns all the audience. And there's some news networks like CNBC for finance and business.

25:57CNN is for politics. They're not mutually exclusive. When you look at activity, what's more important? Is it breadth or is it like depth? Is there 99 % of trading and interest in a very small number of inventory? Or is that breadth massively important? Me and your team were talking before this about Luana and doing some PR in Brazil and just getting the brand in Brazil. Is breadth everything or is it having the 1 % that everyone gives a shit about? It's a great question. We think about this a lot. You know, my mental model for this is you have to have breadth. Product diversity, making sure that people have enough content to engage with and markets that relate to the news or the things that they read on X is important.

26:41And it's a bit similar to X. If you go on X and read about one specific thing all the time, like that's not going to make a very interesting experience. You have to have diversity, even if there are specific topics that are the vast majority of the eyeballs. It's just really a balancing, a constant balancing act between the two. We spoke about kind of becoming a news network and that also takes money. Don said, you fought hard to protect early investors pro rata, even when top tier funds wanted to squeeze the shit out of us. That's interesting. My mental model for this, we're playing a long term, iterated, infinite game.

27:12There's a lot of rounds to that game and every decision is around. And I think it's very important that throughout the game and throughout the rounds, you build a reputation where people can trust you and can trust that when you have a trade-off ahead of you, you will not be quick to basically, you know, kind of prioritize yourself. And you're trying to kind of like do right by people to the extent you can. And it's the same thing, like the people that believed in us early, right? Like even though maybe we don't need them as much right now, my mental model is you need them in terms of a reputation and doing right by them.

27:40That compounds. And if you're somebody that like does right by people around you, over time, people are going to want to work with you. And I think the best people, whether it's investors, partners, team members, want to work with people that like do right by them. Does Sequoia really move the needle in your company? Alfred Lin is incredible. Yes. Yes. Because when I had Alex Bouaziz on the show, he said that Alfred is the one person he doesn't have who he would most like to have. Yeah, I know. Why is Alfred incredible and what specifically makes you say that? Alex picked me so often over the years about Alfred.

28:11Alfred is a very unique, very unique investor in many dimensions, but like a few things that I really appreciate and admire about Alfred. one he's not the type of investor he's kind of the antithesis of what you would usually imagine a VC to be which is like VCs love to make strong simplistic statements you know you tweet something like the way to win is like have a great team and like Alfred's answer to everything is this sort of very nuanced in the gray uninteresting uninspiring answer but it tends to be the right answer and And most investors like simple kind of like structures and frames like, oh, you know, the margins are going to get compressed.

28:50So the business is not going to be very hard. And whereas Alfred is like, well, how is specific compression over time? It's actually going to be slower than expected. And then you're going to grow. And it's kind of a lot of like in the gray, you know, math and nuance. But that helps push you to get to the right balance between this and every decision. So one is nuance. Number two is he's always, always a kind of counterbalancing actor. And the thing I learned with Alfred is every time, so if I go with him with idea A, he will argue for not A. And if I go with idea not A, he will argue for A, always, systematically.

29:22He will always argue the other side, always. And this is to push me back to the middle, to push me back to like, hey, every decision comes with trade-offs and every problem, solution comes with problems. And the last part is like, and again, it's kind of, maybe there's a theme here, is like when the company is doing poorly, Alfred is the most optimistic and will come and like be excited and push you. And when the company is going well, Alfred gets pissy. He just wants to make sure that you don't get over your head. Then you're like, you know, don't forget dark times are coming again. And like, you know, be careful.

29:49But he's really been there for us from the early, early beginning. He's been a huge believer when at times where people really didn't believe it was really hard to believe in Calcian times. And he was just like always consistent. One of the most bullshit statements I think founders say is proliferated is, oh, you never want people who want to join your company because an investor is invested. I think that's utter crap. If Sequoia invest, it does increase the chances of success. It means you'll have another round of funding. It means more good people want to join and people want to make money for their families and make money.

30:23And so it's completely logical that you would get more people want to join post Sequoia investing. Do you agree with me or do you take the stance that don't take people who only join because of your investor? The best people want to win, right? Like they want to join a winning team. And like, I think having great investors is one sign out of many others that you are on a winning team, right? So I think expecting people to like disregard that altogether, you're probably kind of like pushing out or excluding some people that are, you know, winners, people that really want to win. But at the same time, you have to be, you know, make sure you're picking people that are going to do whatever, you know, that are going to really work hard and do whatever it takes to win.

30:59As long as they believe that this is kind of a winning company and a winning formula. So my answer is like, I don't think that people that like see having Sequoia on the cap table as a strong signal are bad people at all. Like, I think no, but I think you still have to do the diligence in the interview is like, is this person just joining just for a free ticket on a ride? Or is this person joining to make that ride go accelerate even harder? And are they going to do whatever it takes and work however hard to make it happen? If the answer to that is yes, then, you know, by all means, you should hire that person.

31:24Which investor do you not have that you would most like to have? If Alex's was Alfred, who's yours? Well, the most recent round, Neil Maddow came in small capacity. I've always wanted to have Neil involved. He's just like such an incredibly smart, like such an incredibly smart person every time I talk to him. Why did you not let Neil come in in a bigger capacity? It's not like a more semi-driven. We just chatted towards the end of the round. We just decided to do something small. I think, who would I really love to have? I have a lot of respect for Rivet and Mickey. I have a lot of respect for Founders Fund.

31:56I have a lot of respect for Altimeter. A lot of the crossovers in the public funds are also great. Learning from people is very important. One of your investors asked something that they asked not to be attributed, which I'm honoring. But they said, did you ever cross paths with SBF? and what did you learn from observing FTX's implosion? I got to know who this investor is. Yeah, I mean, the answer is yes. So actually the funny story is SBF, when I was a freshman at MIT, he interviewed me for Jane Street. And so I've known him since then. And then when he came into the US with FTX, we met once.

32:29We were never really close. He was kind of cold towards us when things were going well. And I think we actually had a history of people sort of looking down on us a lot. And we were a smaller company and we weren't as successful. We were having all these, like we were like doing the regulated route. We were focusing on regulation. We're like, we want to do it right. We want to do it clean, compliant, regulated first. And in those years, it was very unsexy to be that company. You had FTA, like everything was crazy. And like all the unregulated, offshore, like free for all, like those were the sexy companies.

32:59Those were the companies breaking rules and winning. And we were seen as sort of the safe, boring doozers, you know, because we were committed. We were like, we are not going to do this unless the government approves it. I have always been unwavering in my belief, same with Luana, regulatory first. And the reason is because I think in financial services and healthcare, the only way to build something that will last the test of time and that will truly go mainstream is to work with regulators, to do it clean, to do it right. And so maybe the learning came afterwards, which was like, at times you have doubts, right?

33:28Investors like, why are you not growing like FTX? Why are you not doing this? Maybe you should go offshore, you should do that. And you start doubting yourself. And like, maybe the learning was like, honestly, just like stay true to your approach. Like if you really have high conviction forget everything going around you, no matter the valuations, no matter what's building, stay true to your approach. When did you stay true to your approach where you should have changed? For example, for me, I believe for many years that audio was our platform. We don't do video. People don't feel as comfortable on video.

33:56It should be audio. I was stupid and we should have moved to video much sooner. When did you stay true and you should have moved and what did you learn? I think it was a little bit too, and this is going to sound a little bit unusual. I was too product driven for too long. I was always like, we got to build the product and make it absolutely perfect. And it needs to grow, you know, and grow really fast organically. And then we basically do more marketing and build a brand. And I actually think you have to build both together. And I think if I were doing it again, I would really be thinking about building both together.

34:29Your product is never going to be perfect, right? Like it evolves and it shifts and it improves over time. And the brand, you have to learn it. It's a muscle, right? The growth and marketing and brand is not something that you just turn on all of a sudden. It's like, oh, now we're ready to grow. It is a muscle. It's something you have to embed in your company. I've changed my mind on this, which is like, it's not like maybe it's the YC thing, which is build a great product, then people will come. Build a great product, but build a great marketing engine and scramble to do both at the same time is now my best answer to this.

34:54Do you think we've moved too far in that direction? When you look at the, in the distribution is everything, the rage bait, everyone has videos and everyone has a podcast and the clearly I'm going to take pictures doing obscene things. And do you think we've moved too far? Here's the way I would put it, right? I mean, you take that statement to the extreme, it's like maybe you should do marketing and not really focus on product. Well, that is definitely a recipe for failure, right? Like in the order of things, you know, build a great product, but make sure to think about your marketing motion early enough.

35:25Don't think of it like years late, which is what we did, which was, I think, a mistake. The second is build a great product and then think about your marketing. The third is build a great marketing machine and then think about your product is my view. Because no matter the number of eyeballs and the number, you have to build a great product. There's a lot of people that have had massive eyeballs. You see influencers and you see celebrities with mass eyeballs. Their tweets get tens of thousands, if not hundreds of thousands of likes sometimes. And they launch a product that doesn't really work.

35:51That's the age-old story. I'm not a believer of this whole distribution first and that's all that matters. And no, I think you have to do, you have to have a great product. That's a precondition to success. But you have to also build in today's age because technology has become easier, right? It's not, building tech is not the way it was 10 years, 15 years ago. You have to also build a good brand and build a marketing motion. Cristiano Ronaldo announced last night that he was investing in perplexity. Clearly, fantastic judgment as a fellow perplexity investor. My question to you would be, what celebrity would you most like to have in Calci?

36:26Yeah. Well, it's a very good question for Luana because hers is Taylor Swift. And, you know, it's funny because a lot of the coverage this week was like tying her to Taylor Swift. Now she's richer than Taylor Swift, apparently. She's richer than Taylor Swift. She's just younger. She's just younger. I mean, look, my almighty goat is Messi. We have talked to, I think we are talking to his team right now. So maybe we'll figure something out. But I think he's the greatest athlete of all time. He's obviously great on the pitch and everything he's done. But, like, he loves soccer more than anything on this planet.

36:55and you can feel it and you can feel it so heavily and everything around his life, right? Like he's made it, he's become rich, he's become famous. He's all he cares about is getting on that pitch and winning. And you could feel that hunger, like, you know, and the man never really spent obscenely. He stayed with the same person, you know, who's now his wife since he was like, I think 14. He has his family and that's just kind of like, you know, source of joy outside of work. But he is so deeply committing to getting that ball and scoring. And I love that. I love that so much because it was just never about anything other than the soccer for him.

37:29And you could feel that. You mentioned the humility there, the not getting distracted, the one partner focus. I'm a bit worried, dude. The youth of founders today is so much younger than it was even before. You know, I'm meeting 17-year-olds with term sheets for$5 million every week. They're talented, absolutely. And their talent is here. But dude, when I was 17, my emotional maturity was here. And I think most of us was here. Do you worry that we are overestimating the emotional maturity of a generation of very, very young founders? I will say that each generation is more mature than the prior one.

38:04You can definitely feel like I feel like so oftentimes I talk to, you know, 17, 18 year olds now and like they're more mature than I was when I was 17, 18. As you go through battles and as you go through the ups and downs, like it just humbles you. Right. Like you have to go through some of that. I agree with you that like maybe people that are coming at it, like younger people that are coming at it clean. and the first thing they get, like first time they have an idea, they get$5 million term sheet. They get like maybe a wrong set of expectations about what it takes, what are they about to get into and how good they truly are.

38:32And like, I think Luan and I have been lucky. Like we really have a massive, we've always looked at ourselves as the underdogs and had like always a massive chip on our shoulders. Like our internal view of ourselves is not like we're these almighty beings or we're always like, what are we doing wrong? Who's better than us? What are, like we think a lot more that way. And in some ways it's a bit more tiring today, today, but it's made us lucky because we have humbled each other over the years. We just stay very grounded on like what we're lacking at every stage of growth. And like, there's a lot of things we're lacking.

39:01There's so many great people out there, like truly, right? Like if you compare yourself to some of the greats, like they're all operating on such a different level. And like, there's so much for us to learn. Dude, if it's okay with you, I want to do a quick fire round. So I pepper you with questions and you give me your immediate thoughts. Does that sound okay? Yeah, it sounds great. Dude, what's a prediction market that should exist, but you're too scared to list? That's a great question. I think it's markets around like the evolution of geopolitical like conflicts and they can have a lot of utility.

39:31Like that information could be very, very useful but I think they have downsides. And we always avoid markets that like, we try to make our markets always orthogonal. You can never get paid or not paid based on something bad happening. It's really hard, isn't it? Because how do you balance news and information and the benefits that come from transparency with the acknowledgement that with that is financialization. It's a dilemma for any technology. You see this in AI. I mean, that's technology, right? Technology comes with a lot of positives, but there's risks and you have to balance between the two.

39:59Which founder brand in tech do you think has most brilliantly crafted? For example, I think the Collison's brand has been expertly crafted, phenomenally maintained. It's a fantastic brand that they should be very proud of, I'm saying nicely. But that would be my brand that I aspire to. It's a Chanel brand of knowledge and premium. I think Eric and Karim have done a very good job at building a story and a brand around the founders, the team, how the company have come to be, and the quality of their execution. Learning a lot from those two and others. What's the biggest misconception people have about Calci today?

40:38One of the misconceptions is people sometimes think that Calci is gambling, and it's not. It's information and news. It's a very, very different model. And the reason why this, you know, there's this financial market for two reasons. One, it has economic value. But the second one, the really core one is in gambling, there's a house. You walk into a casino and the revenue of the house is equal to its customers' losses. That's how they make money. They're betting against the house. In our model, it's an open, transparent financial market that is neutral. You know, Harry is trading against somebody else.

41:07And whether you lose or make money, we are not incentivized for either way. We make as much money either way. We take a transaction fee on top, the same one, whether you win or lose. And that's why we like the dynamic is much more akin to, you know, the New York Stock Exchange or traditional financial markets than like traditional like casino or sports book. One piece of advice on hiring that is most controversial, unconventional. That's a great question. The vast majority of people are not in the top 10 percent. Most people that come through your door should probably not be at your company. I think people always forget that.

41:41Like, you know, most teams are not great teams. it can be that everybody can be in the top 10%. The way to frame this as a contrarian or controversial take is like most people are kind of mediocre and not in a bad way necessarily, but just mediocre for the job that you're trying to hire them for. And so it's really, really, really hard to find the top five, 10 percenters. I do not think you can only have A players if you have a company over 250 people. By definition, A players are extremely rare if you want to keep that high bar. Post 250, I don't think you can. Do you agree? I don't know. We're not at 250 yet, So we'll see.

42:13What are you at today? A hundred and change. What's the worst part about your culture? That's a great question. We're a little bit chaotic. It's virtue of like very flat, low on process, very low on politics, and just really focus on product, customer, and shipping. That's like every decision is product, customer, shipping. Don't think about anything else. And when that happens, we are trading off the bane of not like you're choosing, in my view, between two different pains, either product velocity. so you either cave on product velocity or you cave on like chaos and organization in a company.

42:45I don't think you can get both. I know you love walking meetings. What's the most memorable walking meeting and why? I do love walking meetings. How do you know that? Dude, I stalked the shit out of you. You know why the show is done well and I don't mean there's agony. It's just because most people don't prep. They don't really put the time in to get to know you. Oh, it's amazing. You know, I spoke to 23 people before this. That's amazing. That's amazing. Let me think. I think I've had so many walking meetings over the years, but I spent a lot of time just walking with Victor Lazart and just sort of thinking about a bunch of different things.

43:20I think Victor is incredibly smart. He's a very, very smart guy. We never just have an agenda. We just sort of talk about different sort of constructs and try to kind of build mental models of the world and what's happening. And he's just kind of always helped me think bigger. And he pushes back on my thinking. We have a lot of walking meetings. I love him. I think he's fantastic. He was brilliant on the show. So final one for you, your dad was an entrepreneur. What unconventional lesson that you haven't shared before did you learn from your dad about entrepreneurship that you've applied? Well, my dad was actually a doctor.

43:51Then he kind of started a consulting firm. But one of the things that is a bit unusual, so I grew up mostly with single mom. So my dad was not super present. Yeah, I saw your tweet actually recently. About broken relationships with fathers. Yeah, I actually, I was like, there's a lot of truth to that, I think. And you don't realize it like subconsciously. I think it's like a subconscious thing. I think it embeds some sort of chip on your shoulder. It's very hard to embed if you had the same relationship with your father. Dude, I so appreciate you. I so appreciate you putting up with me, pushing you on everything from Polymarket to your familial relationships.

44:23Thank you for joining me today, man. Thanks for having me. This was awesome. But before we leave you today, are you drowning in AI tools? chat GPT for writing, Notion for docs, Gmail for email, Slack for comms, and you're constantly copy-pasting between them all, losing context and losing time. This is the AI productivity tax, and it's killing your output. At 20VC, we're all about speed of execution, and Superhuman is the AI productivity suite that gives you superpowers everywhere you work. With the intelligence of Grammarly, Mail, and Coda built in. You can get things done faster and collaborate seamlessly.

45:04Finally, AI that works where you work, however you work. Superhuman gets you from day one with zero learning curve, and it's personalized to sound like you at your best, not like everyone else using generic AI. Get AI that works where you work. Unlock your superhuman potential. Learn more at superhuman.com forward slash podcast. That's superhuman.com slash podcast. And speaking of tools that give you an edge, that's exactly what AlphaSense does for decision making. As an investor, I'm always on the lookout for tools that really transform how I work. Tools that don't just save time, but fundamentally change how I uncover insights.

45:42That's exactly what AlphaSense does. With the acquisition of Tagus, AlphaSense is now the ultimate research platform built for professionals who need insights they can trust. fast. I've used Tegas before for company deep dives right here on the podcast. It's been an incredible resource for expert insights. But now with AlphaSense leading the way, it combines those insights with premium content, top broker research, and cutting-edge generative AI. The result? A platform that works like a supercharged junior analyst, delivering trusted insights and analysis on demand. AlphaSense has completely reimagined fundamental research, helping you uncover opportunities from perspectives you didn't even know how they existed.

46:22It's faster, it's smarter, and it's built to give you the edge in every decision you make. To any VC listeners, don't miss your chance to try AlphaSense for free. Visit alphasense.com forward slash two zero to unlock your trial. That's alphasense.com forward slash two zero. And if AlphaSense helps you make smarter decisions, Daily Body Coach helps you build smarter habits. You know how so many founders and execs say they'll finally take care of their health once things slow down? Well, they never do. Running a business is a marathon made of high-intensity sprints, and taking care of yourself is what gets you through those times performing at your best, both professionally and personally.

47:01This is exactly where Daily Body Coach comes in. Daily Body Coach is a complete, high-touch service for busy founders and executives, combining personalized nutrition and training with psychology-based coaching to help you not just follow a plan, but actually build the systems, habits, and mindset to stay at the top of your game. Built by an exited founder and led by certified experts with masters and PhD level credentials, Daily Body Coach is fully tailored to your life. Whether you're traveling, dining out, or in back-to-back meetings, you get daily accountability, data-driven insights from DEXA scans, and blood work and a highly certified team backing you.

47:40If you're serious about performing at your best, physically and mentally, go to dailybodycoach.com forward slash 20VC. That's dailybodycoach.com forward slash 20VC and take the next step.